U.S., Mexican Firms Team Up to Offer Pay TV in Latin America : Media: TCI’s joint venture follows NBC, HBO and other American companies into a huge potential market.

America’s largest cable TV operator and Mexico’s biggest media company announced a far-ranging joint venture Wednesday to provide pay television throughout Latin America.

Denver-based cable giant Tele-Communications Inc. and Mexico’s Grupo Televisa said they will jointly build cable TV systems in Mexico in addition to launching a variety of pay TV services in Latin America that could reach 350 million consumers, the companies claimed. Terms weren’t disclosed.

TCI becomes the latest American media company to prepare itself for what it trumpets as “explosive” growth in the Latin American television market. HBO, Turner Broadcasting, NBC and Spelling Entertainment have already formed Spanish-language networks aimed at Latin America, where cable and satellite TV are just becoming available.

The TCI-Grupo Televisa joint venture will encompass over-the-air pay TV, pay-per-view and eventually high-definition television and “multichannel TV delivered by means other than traditional broadcasts,” the companies said--an allusion to possible satellite TV.

As part of the deal, TCI will buy a 49% stake in Cablevision S.A. de C.V., Grupo Televisa’s fast-growing cable TV subsidiary. Cablevision is the largest cable TV operator in Mexico and serves about 194,000 subscribers. The subsidiary also has been awarded two UHF pay TV channels and owns various production facilities and contract rights.

In addition, TCI and Grupo Televisa said they will form a new 50-50 joint venture to pursue other cable and pay TV opportunities, including HDTV and strategic alliances throughout Latin America.* “What it looks like they are attempting to do is create in the Spanish-speaking world something similar to what TCI is doing in the United States by introducing 500-channel cable systems,” said Lisbeth R. Baron, an analyst with S.G. Warburg Securities.

TCI is rolling out high-tech cable TV systems that eventually will give viewers a wide choice of movies and TV programs available instantly on demand. Other American cable companies, such as Time Warner, also plan to offer such services, including phone service.

Unlike the United States, where cable TV is widely available, only about 4% of Mexican households have cable service. Cable’s potential is considered smaller in Mexico than in the United States because incomes are lower there.

The TCI deal comes at a time when Televisa is about to face real competition in domestic broadcasting. Televisa has dominated Mexican airwaves, attracting an estimated 90% of the viewers whose only alternative in most cities were stodgy, government-owned channels.

On Wednesday, the government opened bidding on a media package that includes those two national television channels. The four bidder groups--one of which includes a joint venture between Capital Cities/ABC and Paramount--say they plan to provide viewers and advertisers with a true alternative to Televisa programming.

Televisa’s Cablevision division had revenue of $79 million in 1992, a 40% increase from the previous year. This year the revenue is expected to surge to about $116 million, thanks to growth in new cable TV subscribers. Although TCI and Grupo Televisa did not disclose terms of the deal, S.G. Warburg’s Baron estimated that it was worth between $175 million to $200 million.

The agreement also fits Grupo Televisa’s regional expansion strategy.

Since 1991, Televisa has raised about $700 million in stock and bond offerings, mainly to buy other broadcast companies. The corporation has important stakes in broadcasters in Chile and Peru, and it owns the Spanish-language broadcaster Univision in the United States. It has formed a partnership with the formidable Venezuelan broadcaster, Venevision, to conquer the rest of the Spanish-speaking market through the Network of the Americas, now in 22 countries.